SMM News, May 30: Metals market: Overnight, base metals fell collectively in both domestic and overseas markets. LME copper and LME tin both led the decline with a 0.98% drop. SHFE zinc fell 0.86%, while the remaining metals saw relatively small fluctuations in their declines. The alumina front-month contract closed flat at 2,888 yuan/mt, and the foundry aluminum front-month contract fell 0.26%. Overnight, ferrous metals showed mixed performance. Stainless steel fell 0.74%, and iron ore fell 0.26%. Hot-rolled coil and rebar both rose around 0.2%. For coking coal and coke, coking coal rose 0.7% and coke rose 0.89%. Precious metals: Overnight COMEX gold rose 0.83%, up 1.03% on the week, but down 1.29% on the month, marking a third consecutive monthly decline. COMEX silver fell 0.43% overnight, down 0.81% on the week, and up 2.1% on the month. Domestically, SHFE gold rose 1.61%, down 0.23% on the week and down 1.61% on the month, recording a third consecutive monthly decline alongside the overseas market. SHFE silver rose 0.64% overnight, down 1.23% on the week, and up 3.08% on the month. As of 8:25 AM on May 30, overnight closing prices: Macro Front China: From January to April, total operating revenue of national state-owned and state-holding enterprises fell 0.5% YoY, while total profits rose 1.9% YoY. Specifically, total operating revenue was 26.27 trillion yuan, and total profits were 1.37 trillion yuan. Taxes payable rose 3.9% YoY to 2.12 trillion yuan. At the end of April, the asset-liability ratio of state-owned enterprises was 65.5%, up 0.4 percentage points YoY. (Xinhua News Agency) On May 29, in Q1 this year, China's integrated circuit exports reached $72.47 billion, up 77.5% YoY, of which memory product exports reached $45.99 billion, up 174.2% YoY. The surge in memory product exports also transmitted to supply chain service segments. A logistics enterprise executive said that since the beginning of this year, the company's orders related to memory exports doubled, with large orders exceeding 100 million yuan per transaction increasing significantly. Industry insiders noted that the explosive growth in memory product exports was driven by both cyclical factors of tight global supply and demand, and structural industrial changes including industry chain upgrades and market share gains in China's domestic memory sector. The Deputy Secretary General of the Shenzhen Electronics Chamber of Commerce said that compared to March last year, memory prices had risen nearly tenfold, with some even seeing more than tenfold increases. This was mainly because the significant price increases drove up the total (export) value. Domestic brand prices had a large price spread compared to ex-China brands, making them very competitive in terms of pricing. (CCTV Finance) [MIIT and Seven Departments: Encouraging Equipment Manufacturing in Aerospace, Shipbuilding, Automotive, Robotics and Other Sectors] On May 29, the General Office of the Ministry of Culture and Tourism, the General Office of the Central Publicity Department, the General Office of MIIT, the General Office of the Ministry of Education, the General Office of the State-owned Assets Supervision and Administration Commission of the State Council, the Office of the National Cultural Heritage Administration, and the General Office of the All-China Federation of Trade Unions issued a notice on promoting industrial culture, protecting industrial heritage, and developing industrial tourism. The notice mentioned enriching industrial tourism product supply. It encouraged actively developing industrial heritage tourism, promoting the revitalization of industrial sites through creative design, new business format integration, and facade renovation, and developing new scenarios, formats, and models for industrial tourism. It strongly promoted "factory tours," encouraging enterprises in equipment manufacturing sectors such as aerospace, shipbuilding, automotive, and robotics, consumer goods industries such as textiles and apparel, arts and crafts, and food processing, as well as e-commerce logistics, to innovate and launch programs including production process observation, simulated operations, hands-on experiences, and product customization, creating themed sightseeing factories while ensuring production safety and confidentiality requirements. It called for orderly expansion of smart industrial tourism, supporting the use of BeiDou, artificial intelligence, ultra-high-definition video, virtual reality, autonomous driving, and other digital technologies and equipment to create immersive and intelligent industrial tourism experiences. It supported industrial tourism venues in developing themed commerce, immersive experiences, specialty markets, and other formats to create "industrial tourism+" consumption scenarios. It encouraged localities to launch a batch of high-quality industrial tourism routes and brands with regional and industry characteristics. It encouraged industrial enterprises to strengthen product promotion, expand product sales, and build enterprise brands through industrial tourism. The Shanghai International Energy Exchange announced adjustments to the daily price limit for crude oil and low-sulfur fuel oil futures contracts to 17%, the hedging position trading margin ratio to 18%, and the general position trading margin ratio to 19%; it also adjusted trading limits for related crude oil and low-sulfur fuel oil futures contracts. US dollar: As of the overnight close, the US dollar index fell 0.07% to 98.93, down 0.39% on the week and up 0.85% on the month. Market optimism over the extension of the US-Iran ceasefire agreement weakened safe-haven demand. The US April PCE price index rose 3.8% YoY, the highest level since May 2023, in line with expectations, compared to the previous reading of 3.5%; the US April core PCE price index rose 3.3% YoY, a new high since November 2023, also in line with expectations, compared to the previous reading of 3.2%. Additionally, separate data released by the Bureau of Economic Analysis showed that the US economy grew at an annualized rate of 1.6% in Q1, below preliminary data. The initial estimate released last month showed growth of 2%. The data indicated that US consumers became more cautious amid cost-of-living pressures and uneven labor market performance. The Middle East conflict pushed up fuel and other raw material prices, with the impact transmitting to the broader economy and sending consumer confidence to record lows. Meanwhile, this inflation data is likely to further reinforce warnings from some US Fed officials that if price pressures fail to ease, the US Fed will need to consider raising interest rates. Kevin Warsh, who was just sworn in as Fed Chairman on May 22, may need to convince other officials that inflation expectations can be controlled without rate hikes. (Wallstreetcn) Minneapolis Fed President Kashkari said it is too early to conclude that interest rates need to rise, but he believes the US Fed should keep all policy options open. He stated it is too early to conclude that an immediate rate hike is needed. The Fed needs to continue watching economic data and monitoring developments in the Middle East conflict before he would consider whether policy adjustments are necessary. Kashkari noted that under both the most optimistic and most pessimistic scenarios, inflation could remain significantly elevated for an extended period. He is closely monitoring this risk, as well as the possibility that inflation expectations could become unanchored. (Wallstreetcn) US Fed Vice Chair for Supervision Michelle Bowman said it is too early to judge the impact of the Iran conflict on inflation, and policymakers need to look through transitory price shocks. She supported officials retaining language in their statement after last month's policy meeting that hinted further interest rate cuts remain possible. As she thinks about the future path of monetary policy, she wants a clearer understanding of the economic impact of the Middle East conflict and the persistence of those effects. As long as the Fed maintains credibility in its commitment to achieving its inflation target, it is appropriate to look through transitory inflation increases driven primarily by rising energy prices. She expects the "one-time" impact of tariffs implemented by US President Trump to fade. (Wallstreetcn) Macro: Next week, China will release May RatingDog Manufacturing PMI and May RatingDog Services PMI data; the US will release May S&P Global Manufacturing PMI final, May ISM Manufacturing PMI, April construction spending MoM, April JOLTs job openings, May ADP employment, May S&P Global Services PMI final, May ISM Non-Manufacturing PMI, April factory orders MoM, May Challenger job cuts, initial jobless claims for the week ending May 30, May unemployment rate, May seasonally adjusted non-farm payrolls, May average hourly earnings YoY, and May average hourly earnings MoM data; the UK will release May Nationwide house price index MoM, May Manufacturing PMI final, April central bank mortgage approvals, May Services PMI final, and May Halifax seasonally adjusted house price index MoM data; the Eurozone will release May Manufacturing PMI final, April unemployment rate, May CPI YoY preliminary, May CPI MoM preliminary, May Services PMI final, April PPI MoM, April retail sales MoM, Q1 GDP YoY revised, and Q1 seasonally adjusted employment QoQ final data; Switzerland will release April real retail sales YoY, April trade balance, May CPI MoM, and May seasonally adjusted unemployment rate data; France will release May Manufacturing PMI final, May Services PMI final, April industrial output MoM, and April trade balance data; Germany will release May Manufacturing PMI final and May Services PMI final data; in addition, Australia Q1 GDP YoY and Canada May employment data will also be released. Crude oil: As of the overnight close, oil prices in both markets fell together, with WTI down 1.28% and Brent down 0.87%. On a weekly basis, oil prices suffered heavy losses this week, with WTI down 9.15% and Brent down 8.3%, both recording a second consecutive weekly decline and the largest weekly drop since April. WTI fell 16.47% on the month and Brent fell 16.77% on the month, with WTI posting its largest monthly decline since November 2021 and Brent its largest monthly decline since March 2020. According to Xinhua News Agency, US President Trump said on the 29th that the US and Iran had reached agreement on secondary issues beyond Iran's nuclear program and Strait of Hormuz passage, and crude oil fell in response. The oil market in May underwent a clear three-phase evolution: Early month (May 1-6): Oil prices pulled back slightly from near four-year highs, but Brent briefly surged to around $114 after OPEC+ announced a modest production increase and shipping attacks, before plunging to the $101-106 range after US-Iran de-escalation signals emerged. Mid-month (May 7-20): Oil prices oscillated between ceasefire breakdowns and mediation progress, with the continued blockade of the Strait of Hormuz maintaining an elevated risk premium. Month-end (May 21-29): Driven by reports of a US-Iran agreement in principle to reopen the strait, Brent briefly fell to the $93-100 low range, WTI touched $88-92, and Brent closed around $92. (Wallstreetcn) Nevertheless, analysts emphasized that until the conflict truly ends and the strait resumes normal passage, global crude oil inventories will continue to deplete by approximately 10 to 14 million barrels per day, and physical market fundamentals remain tight. The decline in oil prices under ceasefire expectations reflected more the pricing of future supply recovery rather than a fundamental change in the current supply-demand pattern. (Wallstreetcn) Recently, reports disclosed that calculations by Goldman Sachs showed global crude oil inventories could fall below the equivalent of 100 days of global demand as early as the end of May. Goldman Sachs estimated that as of the end of April, global crude oil inventories were equivalent to approximately 101 days of global demand, and were expected to fall to 98 days by the end of May. Of this, "visible inventory" observable through satellites and other means was estimated at only 73 days of demand. Reports indicated that currently only a few vessels can pass through the Strait of Hormuz each day, resulting in a daily global crude oil supply loss exceeding 10 million barrels. (Wallstreetcn)

US Fed Vice Chair Bowman noted that it was still too early to judge the impact of the Middle East conflict on US inflation, and that temporary price shocks should be overlooked. However, Kansas City Fed President Schmid argued that it was difficult to continue viewing the current energy price shock as a "transitory" factor, and that officials needed to clearly express their willingness to take necessary measures to maintain price stability. The Fed's Kashkari stated that it was too early to determine whether rate hikes were needed, and that all possible policy options should be kept open. Fed official Paulsen said there had been no structural change in inflation.

Analysis of Copper Scrap Market Operations in May 2026: Supply-Demand Deadlock and Structural Contradictions amid High Volatility

Around May 23, 2026, import and export data for cobalt and lithium battery industry chain-related products in April were released in a concentrated manner. Data showed that China's spodumene imports in April reached 758,000 mt in physical content, down 9.5% MoM and up 21.7% YoY. Lithium carbonate imports, China imported 32,650 mt of lithium carbonate in April, up 9% MoM and up 15% YoY....... SMM compiled the import and export data for battery materials, as detailed below: Upstream Lithium Concentrates In April 2026, China's spodumene imports reached 758,000 mt in physical content, down 9.5% MoM and up 21.7% YoY, equivalent to approximately 63,000 mt of LCE. Customs data showed that April spodumene imports pulled back MoM from March, reaching 758,000 mt in physical content. By source country, Australian ore port arrivals returned to relatively normal levels, with over 350,000 mt arriving this month, up 38.9% MoM; Zimbabwe's earlier shipments arrived in the month at 102,000 mt, down 9.2% MoM; South Africa and Nigeria saw some contraction in monthly port arrivals, while ore from Mali had almost no notable port arrivals this month due to shipping schedule impacts. Notably, spodumene ore powder sold by Brazil in early 2026 arrived at ports this month, driving a significant increase in port arrivals from this country. Additionally, after SMM screening, the month's incoming ore was equivalent to 63,000 mt of LCE. Among the incoming ore, lithium concentrates accounted for 67%, with the share edging down MoM, mainly because apart from Australia , ore from other source countries contained some relatively low-grade ore. Source: China Customs, compiled by SMM Spodumene concentrates (CIF China) spot pricing, according to SMM spot quotes, spot prices for spodumene concentrates (CIF China) fluctuated upward in April. As of April 30, the spot price for spodumene concentrates (CIF China) rose to $2,540/mt, up $221/mt from the month-end March price of $2,313/mt, a gain of 9.81%. According to SMM, lithium carbonate prices continued to rise in April, and spodumene concentrates prices rose in tandem with salt prices, with gains exceeding those of lithium carbonate itself, causing non-integrated enterprises that purchased externally spodumene concentrates to suffer losses, with spot profitability remaining in deficit. In April, spot circulation of lepidolite concentrates relatively eased. Meanwhile, as lithium carbonate prices rose, processing fees for non-integrated enterprises also increased accordingly, preserving a certain profit margin for their processing operations and enabling these enterprises to achieve spot profitability. However, recently, spodumene concentrates prices adjusted in tandem with lithium carbonate price fluctuations, and the price transaction center shifted downward. According to SMM's latest findings, disrupted by rumors of production resumptions at Jiangxi mines this week, lithium carbonate futures and spot prices declined, further dragging down the overall transaction center. Currently, lithium mines showed a weak willingness to make shipments, and transactions were mostly concentrated between traders and buyers. Port lithium ore inventory continued to decline. Going forward, attention should still be paid to the potential tight lithium ore supply triggered by high operating rates in the lithium chemicals industry, and lithium ore prices were expected to hold up well. Lithium Carbonate According to customs data, China imported 32,650 mt of lithium carbonate in April, up 9% MoM and 15% YoY. Of this, 21,000 mt was imported from Chile (65% of total imports), 9,555 mt from Argentina (29%), and 1,100 mt from Indonesia (3%). From January to April, China's cumulative lithium carbonate imports reached 116,000 mt, up 47% YoY cumulatively. In April, China exported 370 mt of lithium carbonate, down 17% MoM and 50% YoY. From January to April, China's cumulative lithium carbonate exports totaled 1,886 mt, up 7% YoY cumulatively. In April, China imported 17,942 mt of lithium sulfate, up 9% MoM and 296% YoY. From January to April, China's cumulative lithium sulfate imports reached 58,900 mt, up 121% YoY cumulatively. According to SMM spot quotes, spot lithium carbonate prices generally trended upward in April. As of April 30, the spot lithium carbonate price rose to 177,000 yuan/mt, up 14,000 yuan/mt or 8.59% from 163,000 yuan/mt on March 31. According to SMM analysis, China's lithium carbonate prices followed a "V-shaped" trend of first declining then rising in April, with the monthly average price up 6% MoM. In the first ten days, geopolitical disruptions in the Middle East intensified global risk-aversion sentiment, causing non-ferrous metals and lithium carbonate prices to fluctuate downward. In the mid-to-late period, driven by Zimbabwe's export ban, Jiangxi mine license renewals, and rising costs, prices began to rebound and fluctuate upward, with the month-end price center shifting notably higher. Upstream and downstream purchasing remained stagnant, with the psychological price spread widening week by week. Upstream producers held prices firm and held back from selling, maintaining high offer prices; downstream buyers made just-in-time procurement only, with psychological price levels concentrated at 155,000-175,000 yuan/mt, restocking on dips only when prices fell rapidly. In April, battery-grade spot lithium carbonate prices dropped to around 155,500 yuan/mt in the first ten days, then rallied all the way to 177,000 yuan/mt by month-end. As of May 29, domestic battery-grade spot lithium carbonate was quoted at 174,000-181,000 yuan/mt, with an average price of 177,500 yuan/mt. Battery Materials LiPF6 According to China Customs data, in April 2026, China's cumulative LiPF6 exports totaled approximately 868 mt, down approximately 80.9% MoM, while cumulative LiPF6 imports were approximately 96 mt. Export side, China's LiPF6 exports in April 2026 were approximately 868 mt, down approximately 80.9% MoM from March and down approximately 33.2% YoY. Specifically, as the VAT rebate policy for LiPF6 exports was officially abolished starting April 1, 2026, enterprises rushed to export in March in advance, and ex-China electrolyte enterprises built up certain inventory, leading to MoM declines in China's exports to multiple major destination countries in April. Among them, exports to Poland were 337.5 mt (down approximately 80.4% MoM), South Korea 81.804 mt (down approximately 92.56% MoM), Czech Republic 150 mt (down approximately 67.43% MoM), and the US 101.908 mt (down approximately 61.7% MoM). Only exports to Japan saw an increase — exports to Japan were 191.37 mt, up approximately 50.77% MoM. Artificial Graphite In April 2026, China's artificial graphite imports were 757 mt, up 12.4% MoM and down 32.9% YoY. Average import price side, in April 2026, the average import price of China's artificial graphite was 75,941 yuan/mt, up 23.1% MoM and up 14.6% YoY. In April 2026, China's artificial graphite exports were 45,895 mt, up 22.3% MoM and down 21% YoY. Average export price side, in April 2026, the average export price of China's artificial graphite was 9,214 yuan/mt, down 6.6% MoM and up 0.26% YoY. Exports from the top five provinces rose 21% MoM from the previous month, with two provinces seeing export growth exceeding 35% MoM and another province achieving a MoM increase of 20%. Import market, downstream power battery enterprise orders in China gradually recovered in April. Combined with tight spot capacity at leading anode enterprises, restocking demand was released, boosting artificial graphite imports to rebound from weakness on a MoM basis. However, import volumes remained on a YoY decline, primarily because China's anode industry had ample overall capacity with supply still in a surplus pattern. Domestic self-sufficiency continued to strengthen, and the industry's reliance on imported raw materials and finished products steadily declined. Flake Graphite In April 2026, China's flake graphite imports were 3,178 mt, down 19% MoM and down 45% YoY. Data source: China Customs, SMM In April 2026, China's flake graphite exports totalled 4,093 mt, down 50% MoM and 54% YoY. Export market, the official cancellation of the flake graphite export tax rebate policy this month directly squeezed the profit margins of foreign trade enterprises, significantly dampening overall export willingness across the market. Meanwhile, the approval pace for flake graphite export licences slowed down, hindering foreign trade shipment processes. Combined with weak ex-China end-use demand, multiple bearish factors converged to directly boost a sharp decline in industry export volumes. The import market also continued to weaken. Goods originally destined for exports were redirected to the domestic sales market, making China's local supply increasingly abundant. Market enthusiasm for import procurement was insufficient, ultimately causing imports to decline in tandem this month. Phosphate Ore May 20, 2026, from customs data. In April 2026, China's phosphate ore imports were 207,000 mt. April imports rose 13.5% from 182,000 mt in March. The total import value in April was $19.741 million, up 35.7% MoM from $14.552 million in March. The average unit price was $95.5/mt, up 19.6% from $79.9/mt in March. Import commentary: In May, Egypt's phosphate ore exports faced "policy tightening and weakening demand". On May 13, Egypt's Ministry of Petroleum and Mineral Resources announced it would no longer sign any new phosphate ore export contracts. Previously, Egyptian Prime Minister Mustafa Madbouly stated clearly at a meeting on May 10 that the government was pushing a transition from raw material exports to the manufacturing of high-value-added products such as phosphate fertiliser. Already signed long-term contracts would not be affected. This is expected to push up import prices and may affect import volumes going forward. Cobalt Cobalt Hydrometallurgy Intermediate Products In April 2026, China's cobalt hydrometallurgy intermediate products imports were approximately 1,247 mt in physical content, down 26% MoM and 98% YoY. Of this, imports from the DRC were approximately 945 mt in physical content, down 43% MoM and 98% YoY. In April 2026, the average import price of China's cobalt hydrometallurgy intermediate products was $17,187/mt in physical content, up 2.63% MoM. It was reported that most miners had completed Q4 2025 quota approvals, but Q1 2026 quota approvals were again delayed due to issues with sampling, detection, and other procedural processes, resulting in lower approval efficiency. Additionally, DRC currently faced tight transportation capacity. For economic reasons, fleets prioritized transporting oil products and chemicals that were in short supply for production, followed by other metals with shorter turnover cycles, and cobalt among non-ferrous metals came last, meaning cobalt transportation capacity faced significant challenges. Constrained by the above factors, miners primarily focused on building in-transit inventory and had not yet concentrated on booking vessels, so the timing of large-scale intermediate product arrivals at ports was likely to continue being delayed. Unwrought Cobalt China's unwrought cobalt imports in April 2026 were approximately 1,334 mt, up 39% MoM and up 59% YoY. In April, refined cobalt imports mainly came from Indonesia, Russia, and Madagascar, with imports of 462 mt, 457 mt, and 182 mt respectively. The main reason for the increase this month was that domestic smelters lacked intermediate product raw materials and imported cobalt slabs and cobalt briquettes for re-dissolution to ensure normal production. In terms of average import prices, the average import price of unwrought cobalt in China in April 2026 was $52,724/mt, up 4.72% MoM. Cumulative imports from January to April 2026 totaled 5,916 mt, up 153% YoY cumulatively. Export side, China's unwrought cobalt exports in April 2026 were approximately 218 mt, down 47% MoM and down 95% YoY. By country, China's exports to the US dropped significantly, with April exports to the US at 35 mt, down 87.5% MoM. The main reason was that US alloy-grade refined cobalt demand pulled back in April, and ex-China branded refined cobalt was already sufficient to meet regional demand, with some refined cobalt traders redirecting destinations from the US back to China. In terms of average export prices, the average export price of unwrought cobalt in China in April 2026 was $54,590/mt, up 5.80% MoM. Cumulative exports from January to April 2026 totaled 1,792 mt, down 76% YoY cumulatively.

The U.S. National Oceanic and Atmospheric Administration (NOAA) has formally certified the USA B exploration license application submitted by TMC USA, the U.S. subsidiary of The Metals Company (Nasdaq: TMC). The USA B area covers approximately 122,000 km² of seafloor in the Clarion-Clipperton Zone, estimated to contain 1.02 billion tonnes of polymetallic nodules with high grades of nickel, cobalt, copper, and manganese. NOAA will now begin preparation of an Environmental Impact Statement for TMC USA's proposed exploration activities. The certification follows NOAA's April 2026 determination that TMC USA's separate consolidated application for an exploration license and commercial recovery permit for the USA A area is fully compliant with the Deep Seabed Hard Mineral Resources Act.

In May, the global aluminum market continued the core pattern of LME outperforming SHFE with divergent trends. The most-traded SHFE aluminum contract moved sideways in the doldrums, while LME aluminum maintained strength supported by low inventory and geopolitical premiums, with both seeing slight corrections at month-end. This month's market-driving logic revolved around Middle East ceasefire negotiations, rising expectations for US Fed interest rate hikes, divergence in inventory in and outside China, and accelerating export transmission, further highlighting the divergence between domestic and overseas aluminum price trends. The SHFE/LME aluminum price ratio declined further from the April average of 7.03 to the May average of 6.66, with the inverted price spread between domestic and overseas markets widening, as the trend of overseas aluminum prices outperforming SHFE aluminum continued to deepen. May Aluminum Price Review: Similar Pace but Intensifying Divergence in Strength China · The Most-Traded SHFE Aluminum Contract The contract opened low at around 24,800 yuan/mt at the beginning of the month. After the holiday, it pulled back rapidly due to high domestic inventory and weaker-than-expected downstream demand, hitting the monthly low of 24,075 yuan/mt on May 7. In mid-month, it rebounded to 24,620 yuan/mt driven by positive signals from the China-US meeting. In the latter part of the month, it pulled back to 24,375 yuan/mt as ceasefire expectations heated up combined with off-season drag. Ex-China · LME Aluminum The contract opened at $3,480/mt at the beginning of the month. In mid-month, it rallied to $3,680/mt (the monthly high and a four-year high) supported by supply disruptions and continued destocking. At month-end, it corrected to $3,628/mt, impacted by news that a US-Iran ceasefire agreement was 95% reached. In terms of price-driving factors, geopolitics remained the core common variable for aluminum prices in and outside China this month. Production cuts in the Middle East and shipping disruptions through the Strait of Hormuz continued to provide a shortage premium for LME aluminum. The price divergence stemmed from dual differences in macro policy and fundamentals—slow destocking from high inventory levels in China constrained SHFE aluminum's rebound space, while historically low inventory and a high premium structure outside China provided strong support for LME aluminum prices. Core Inventory Indicators: Extreme Divergence Between Domestic and Overseas Inventory with Contrasting Destocking Pace China · Gradual Decline from High Levels, Pressure Persists Social inventory began to pull back from the high of 1.456 million mt at the beginning of May, reaching approximately 1.401 million mt by month-end, with only about 55,000 mt destocked over the entire month. The destocking pace was slow, with inventory remaining at a near six-year high for the same period. SHFE warrants recorded 485,500 mt on May 29, still showing inventory buildup on a weekly basis, confirming ample spot supply in China. Ex-China · 20-Year Low, Structural Deficit Becomes Evident LME total inventory declined from approximately 363,000 mt at the beginning of the month to 338,000 mt at month-end, a decrease of approximately 25,000 mt over the month, with inventory levels at historically extreme lows. LME aluminum Cash-3M premiums closed at $92.53/mt at month-end, widening significantly from approximately $29/mt at the beginning of the month. Japan's Q3 spot premiums rose, premiums in Europe and the US continued to climb, and the rigid supply gap outside China provided sustained and strong support for LME aluminum. Macro and Fundamentals Intertwined: Geopolitical Dynamics and Rate Hike Expectations Dominating Sentiment Geopolitical Variables: Repeated Ceasefire Negotiations At the beginning of the month, the US military launched airstrikes on southern Iran, with military frictions between the two sides recurring. Shipping through the Strait of Hormuz remained disrupted, and geopolitical risk premiums climbed. At month-end, a US-Iran framework agreement was reportedly 95% complete, and a 60-day temporary ceasefire draft emerged. Expectations for the resumption of strait navigation warmed, and geopolitical premiums converged significantly. On the morning of May 28, both SHFE aluminum and LME aluminum plunged. US Fed Expectations: Hawkish Pressure US April CPI came in at 3.4% YoY, with core PCE reaching 2.8%. Inflation stickiness, compounded by Middle East conflicts pushing oil prices above $90/barrel, led hawkish US Fed officials to release signals of "raising rates at any time." Market expectations for a 25bp rate hike within the year surged abruptly, and a stronger US dollar continued to weigh on the demand outlook for non-ferrous metals. IV. Current Core Market Trades and Arbitrage Strategies (Including Divergence in Capital Behavior) Based on the current SHFE and LME fundamentals, inventory pace, and LME curve structure, the aluminum market overall exhibits a cautious unidirectional and arbitrage-dominated trading pattern. In particular, SHFE-LME cross-market reverse arbitrage (selling SHFE and buying LME) has become the core market play. Capital behavior among market participants has shown clear divergence, mainly falling into three categories: 1. Early-positioning capital (light long positions in reverse arbitrage) Some trading capital has positioned reverse arbitrage ahead of time based on the logic that China's inventory inflection point has already appeared. The core expectation of such capital is that as China's inventory gradually enters a destocking channel, accelerated destocking is highly likely to follow, rapidly easing China's high inventory pressure. The weak SHFE aluminum pattern is expected to be corrected, and the depressed SHFE-LME ratio has clear room for recovery, warranting early light positioning to capture the ratio rebound. 2. Wait-and-see cautious capital (staying on the sidelines for now) The majority of market capital has maintained a wait-and-see stance, with two core concerns: First, China is currently only experiencing slow destocking, and its sustainability is questionable during the off-season, as inventory pressure has not been substantially cleared and SHFE aluminum lacks sufficient rebound momentum. Second, LME is currently in a deep backwardation structure, making roll and extension costs for LME aluminum bulls extremely high, with significant cost erosion and high open interest pressure for holding long-term reverse arbitrage positions. Combined with the entrenched short-term pattern of LME outperforming SHFE, the price spread still risks further widening. Therefore, this segment of capital has chosen to wait for confirmed signals of accelerated destocking in China before entering the market. 3. Previously trapped capital (open interest under pressure, caught in a dilemma) Some positions that were established earlier to set up SHFE-LME reverse arbitrage are currently slightly underwater. Recently, LME has been continuously driven higher by geopolitical risks while SHFE has been range-bound and weak, with the divergence between LME outperforms SHFE intensifying, causing the ratio to remain persistently low and unrealized losses to emerge. Meanwhile, LME contango fees have risen sharply, long positions carrying costs continue to increase, and the pressure of holding trapped positions has further intensified. In the short term, these positions are caught in a dilemma, highly dependent on the subsequent pace of China's inventory destocking to restore the spread. Overall, the sole core inflection variable for SHFE-LME reverse arbitrage is currently the pace of domestic inventory destocking. Once weekly inventory drawdowns continue to widen and accelerated destocking is confirmed, it will directly drive a reversal in three types of capital behavior: sidelined capital entering the market en masse, trapped positions getting unwound, and early-entry positions realizing profits, triggering a rapid recovery in the ratio. Looking ahead to June, the aluminum market's core focus centers on three dimensions: first, whether the US-Iran ceasefire agreement can be formally signed and the pace of resuming navigation through the Strait of Hormuz, which will directly determine the extent of geopolitical premium convergence — if the agreement materializes and Middle Eastern aluminum supply gradually recovers, the prior support logic for LME aluminum faces correction risk; second, whether domestic inventory destocking can accelerate — continued export growth and import suppression will keep driving destocking, and the magnitude of destocking will determine SHFE aluminum's upside elasticity. The US Fed's June FOMC meeting is highly likely to keep rates unchanged, but a hawkish tone and sticky inflation will continue to suppress interest rate cut expectations, with a stronger US dollar maintaining sustained pressure on non-ferrous metals. Overall, the aluminum market in June is expected to continue the pattern where LME outperforms SHFE, though the degree of divergence is likely to narrow. LME aluminum is expected to hover at highs amid the tug-of-war between geopolitical premium convergence and rigid ex-China supply deficits, with downside room constrained by low inventory and high premiums. [ Data source disclaimer: Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice. ] Data source: SMM

In May 2026, China's secondary lead production declined significantly, down 18.96% MoM and 9.26% YoY, while secondary refined lead pulled back 19.16% MoM and 15.03% YoY. According to SMM data, spot lead prices were in the doldrums in May, with the SMM #1 lead ingot monthly average price at approximately 16,475 yuan/mt.……

SMM May 5 News: 【Guangdong 40,000-ton waste power battery recycling project launched】Recently, the Huizhou Municipal Bureau of Ecology and Environment in Guangdong Province issued a public notice of project acceptance for the "Annual 40,000-ton Waste Power Battery Anode Graphite, Aluminum-Plastic Composite Film, and Separator Recycling Project" of a Guangdong company. According to the notice, the total investment is 116 million yuan, and the project site is located in Boluo County, Huizhou, Guangdong. The project will build an annual 40,000-ton waste power battery anode graphite, aluminum-plastic composite film, and separator recycling facility, regenerating 20,000 tons of waste battery anode graphite, 10,000 tons of aluminum-plastic film, and 10,000 tons of separator per year. 【Guiyang 120 million yuan lithium battery green recycling project launched】Recently, the Guiyang Comprehensive Bonded Zone in Guizhou Province released the first public participation announcement for the environmental impact assessment of a Guizhou company's "Guiyang Comprehensive Bonded Zone Waste Lithium Battery Green Recycling and High-Value Utilization Industrial Base Project". According to the announcement, total investment is 120 million yuan, and the site is located in the Guiyang Comprehensive Bonded Zone. The project will purchase three sets of equipment, and plans to build one waste lithium battery recycling and dismantling production line, one cathode and anode sheet crushing production line, and one echelon utilization production line, rapidly forming large-scale production capacity. 【Huai'an, Jiangsu: 30,000+ ton waste LFP battery comprehensive recycling project landed】Recently, the Huai'an Municipal People's Government in Jiangsu Province issued a notice regarding the proposed review of the environmental impact report for a Jiangsu company's "High-Value Comprehensive Recycling of Waste LFP Batteries and Scrap to Produce 10,000 mt/year Battery-Grade Lithium Carbonate Project". Currently, the project will construct one dismantling and crushing line for retired LFP battery cells, one dismantling and crushing line for scrap LFP battery cells and LFP cathode sheets, and one hydrometallurgical lithium extraction line for black mass. 【Tianjin Jinghai adds 10,000-ton waste LFP battery processing project】Recently, the Administrative Approval Bureau of Jinghai District, Tianjin, issued a notice on the acceptance of the environmental impact report for a Tianjin company's "LFP Battery Material Deep Processing Project". According to the notice, the company plans to invest 120.1 million yuan to build the "LFP Battery Material Deep Processing Project", purchasing one crushing and sorting line and LFP mixed black mass deep processing equipment. It will mainly crush and sort externally purchased waste LFP batteries, and further utilize part of the LFP mixed black mass obtained from crushing and sorting. It will add an annual waste LFP battery processing capacity of 10,000 tons and an LFP mixed black mass processing capacity of 5,000 tons. 【Wenzhou, Zhejiang: 5,000-ton waste power battery dismantling and standardized echelon project landed】Recently, the Longwan District People's Government of Wenzhou, Zhejiang Province, published an environmental impact assessment notice for a Zhejiang company's "Waste Power Battery Dismantling and Standardized Echelon Utilization Project". According to the notice, the company's project is located in the Wenzhou Bay New Energy Technology Industrial Park. The project will utilize existing factory buildings to set up one module and pack assembly line and two used lithium battery pack physical dismantling lines, without involving cell disassembly. Upon completion, th

SMM May 28 News:This week (May 22–29), China's waste lithium battery recycling sector witnessed a wave of project public announcements and launches, spanning more than ten provinces and cities including Guangdong, Hebei, Jiangsu, Anhui, Tianjin, Zhejiang, and Hubei.

The management committee of the Jiang'an Economic Development Zone in Sichuan issued the first environmental impact assessment public notice for a Sichuan company's technical renovation project to produce 26,500 tons of battery-grade lithium carbonate annually. The project plans to convert the existing finished product warehouse area of Phase I into a lithium carbonate production line with a design capacity of 26,500 t/a. Using lithium hydroxide return solution produced by the company as raw material, it will adopt a lithium hydroxide carbonation process to produce battery-grade lithium carbonate. The annual operating time is 7,200 hours. The project does not involve new land, new ground structures, or additional production capacity.